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ISLAMABAD: A research report of the SDPI (think tank) has revealed that the Federal Board of Revenue (FBR) has suffered a revenue loss of Rs567.34 billion during the last seven years due to the influence of multinational cigarette manufacturing companies on tax policy.

The SDPI new study disclosed that the intricate dynamics of Pakistan’s tobacco industry and its significant impact on the nation’s fiscal landscape. The examination of FBR data and associated factors reveals a staggering Rs567 billion revenue loss over the past decade, underscoring the critical need for tobacco taxation policy development and tobacco revenue policy reforms. The influence of multinational companies, coupled with the introduction of a three-tier excise duty structure, has raised concerns about tax evasion and its adverse effects on public health.

It becomes evident that safeguarding revenue streams while prioritizing public health necessitates a careful re-evaluation of tobacco tax policies. The insights gleaned from this study call for a proactive approach to address these challenges, fostering a balance between economic interests and the well-being of the population. Moving forward, policy adjustments must be considered to ensure sustainable revenue generation and mitigate the negative consequences associated with public health, the report said.

Pakistan ranks among the top 10 countries in tobacco consumption putting excessive strain on the already challenged health system. FBR’s rationale behind introducing a lower tier (Tier-III) was to curtail the illicit tobacco trade, however, health care costs were not given due weightage while taking this decision. Currently, the health burden of Pakistan directly attributable to tobacco use is Rs615.07 billion and total direct and indirect cost of cancer, cardiovascular and respiratory diseases amount to Rs437.76 billion, which is almost four times higher than the overall tax revenue from the tobacco industry, SDPI study said.

The SDPI recommended that there is an urgent need to develop long-term tobacco taxation policy in Pakistan. A uniform and simple tobacco taxation system must incorporate an annual increase in the excise rates by at least 30% to ensure the reduction in tobacco consumption and growth in tobacco revenue.

Copyright Business Recorder, 2024

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